Neutral sphingomyelinase 2 (nSMase2), the product of the sphingomyelin phosphodiesterase 3 (SMPD3) gene, catalyzes the hydrolysis of sphingomyelin to ceramide. Ceramide acts on various signaling pathways to influence cell proliferation, survival, and stress response. Altered levels of sphingolipids and ceramides have been reported in various cancer types, including oral squamous cell carcinoma (OSCC). OSCC patients exhibit a poor 5-year survival rate of 50%, a figure that has remained stagnant for decades. To overcome this requires a better understanding of the molecular events driving this disease. The molecular analysis of the oral cavity reported here has identified the SMPD3 promoter region as a site of frequent hypermethylation and downregulation in pre-malignant and malignant tissues as compared with healthy control tissues. While lentivirus-induced overexpression of SMPD3 in cell models of oral dysplasia and OSCC did not significantly alter proliferation, it did decrease migration and invasion and increased resistance to the epidermal growth factor receptor (EGFR) inhibitor erlotinib. These results suggest that SMPD3 downregulation is a common event in OSCC progression and may promote the spread of tumor cells.